Thursday, 1 March 2012

Too little reform

There has been much talk about the government's reforms of welfare recently. One issue I have with the reforms is that they don't go far enough. Reforms aimed at getting people into work need to have jobs available for these people to go to. That is, if the government is serious getting people into jobs then it needs to reform the labour market at the same time it reforms welfare.

An unreformed labour market will have trouble adjusting to having a new intake of people looking for work. Given the level of unemployment we have at the lower skill/experience end of the labour market having a whole bunch more people entering it isn't going to end well.

So if the government is serious about reform, rather than just pulling a political stunt, then it needs to reform the labour market if it wants its welfare reforms to work.